NCA and Telcos butt heads over minimum on-net tariffs

The National Communications Authority (NCA) has proposed that all telcos in the country should peg their minimum on-net tariff at 4Gp per minute but two telcos, Tigo and Vodafone are at the Electronic Communication Tribunal seeking to thwart the proposal.

On-net or retail tariff is what the telcos charge their customers for calling other numbers on the same network. For instance Tigo to Tigo or Vodafone to Vodafone calls.

Currently the NCA has set interconnect or off-net (calls from one network to the other) at 4Gp per minute, which means if a Glo customer calls a Tigo number, Glo would have to pay Tigo 4Gp for every minute of that call.

However, the telcos are free to determine their own minimum on-net rates. And that is why some telcos are able to run promotions that offer their customers as low as 0Gp for on-net calls.

Vodafone, for instance, runs the Vodafone Red packages, which offer virtually 0Gp per minute of calls made from Vodafone to Vodafone, plus additional minutes for off-net, IDD and data for internet browsing.

Other telcos also run similar promos that offer between 0Gp and 1Gp per minute to their customers for on-net calls. Tigo actually has a low default on-net rate of 3Gp per minute.

Adom News is reliably informed that the NCA, in its wisdom, thought those telcos who could afford to offer such low tariffs are threatening to run the smaller telcos out of business and eventually collapse the industry.

The NCA’s position, Adom News gathered, is based on avoiding a “clubbing effect”, where big players could use significantly low on-net pricing to either win customers of smaller players, or force the smaller players to also reduce their rates and thereby become less profitable and collapse, so that only a club of few big players would be left in the market.

Indeed, the findings of research by Sjaak Hurkens and Ángel López, on telecom tariffs regulation in Europe, published in the September 2014 issue of the Economic Journal concluded that “if off-net calls are more expensive than on-net calls, a consumer will prefer to join the operator with the larger market share because more calls will be on-net.”

So to prevent the “clubbing effect”, the NCA made the proposal to the telcos to place their on-net tariffs at a minimum of 4Gp, but the big telcos running the low on-net tariff promos are up in arms against the proposal and the matter is currently before the Electronic Communication Tribunal, which has the powers of a high court.

Tigo and Vodafone think because the NCA has not declared a dominant player in the Ghanaian telecoms market, there is no justification in seeking to protect “smaller” players against big players.

“If there was an official dominant player then the regulator would be right in seeking to protect smaller players against that player. But we don’t have one in our market so what is the point in regulating the retail tariffs,” one telco official asked.

They also argued that whatever tariff telcos offer their own customers for making calls among themselves, is the telco’s own business because it is the telco’s decision to give its customers free calls or not.

“Because of the regulated 4Gp per minute of interconnect rate, we cannot charge anything lower than 4Gp when the call is off-net, but on-net is our own money and it is between us and our customers,” they insist.

The telcos believe the NCA’s proposal will only thwart efforts by the telcos to excite their own customers.

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